Sichenzia Ross Friedman Ference LLP Partner Gregory Sichenzia was interviewed last week by Law360’s Tom Zanki on the 10 firms that are currently counseling nearly a $1 billion worth of IPOs for the week of Nov 9, 2015.
In the article, Sichenzia discussed how “the week’s volume represents an improvement after a string of quiet weeks but noted that LoanDepot is the lone robust mark“. Read the live article here or read the transcript below:
Nearly $1B In IPOs Following Long Lull
By Tom Zanki
Law360, New York (November 6, 2015, 9:34 PM ET) — Ten firms could guide initial public offerings totaling nearly $1 billion the week of Nov. 9, led by an estimated $510 million IPO of a startup nonbank lender vying to challenge traditional banks, suggesting a busier week for deals lawyers facing an otherwise sluggish offerings market.
California-based LoanDepot Inc., guided by Kirkland & Ellis LLP, exceeds all other scheduled IPOs combined in estimated proceeds. The upstart company, which sells home loans and unsecured personal loans, is going public to support growth opportunities it believes are not filled by traditional banks that are under increased capital requirements and regulatory constraints, prompting them to leave certain markets and scale back lending products.
LoanDepot plans to issue 30 million Class A shares priced between $16 and $18 apiece on the New York Stock Exchange under the symbol LDI. The balance of IPO pipeline for the week is filled mostly by smaller life sciences and technology offerings, all priced below $100 million.
Greg Sichenzia, a partner with Sichenzia Ross Friedman Ference LLP, said the week’s volume represents an improvement after a string of quiet weeks but noted that LoanDepot is the lone robust mark. Questions about weak IPO returns — citing that only 38 percent of the year’s IPOs are trading above their initial prices — and a cooler climate for once-hot biotechs mean that a sustainable rebound is unlikely before 2016. IPO returns are -2 percent year to date, according to researcher Renaissance Capital.
“Right now, if you need money, you will go out and do your deal, but I don’t think anyone is expecting any big pop,” Sichenzia said.
Sichenzia added that institutional investors such as mutual fund companies that represent most of IPO participation are likely to be selective, given such companies are scrutinized for year-end results and could be reluctant to embrace IPOs when new stocks are generating soft returns.
Cooley LLP partner Charlie Kim said there are two windows left before year’s end — the coming days before Thanksgiving and a brief window in December before the holidays — that will determine whether the fourth quarter and the year ends on a strong note.
The pipeline is filling, Kim said, but companies are carefully timing their entries considering uncertain macroeconomic conditions and downward pressure on IPO pricing and returns.
“A lot of us are interested in seeing how these next string of upcoming IPOs perform, not only in terms of how they price in the IPO itself but also with respect to how they perform after they go public,” Kim said.
Following LoanDepot, the IPO pipeline for the coming week includes an estimated by $80 million offering by Massachusetts biopharmaceutical company Wave Life Sciences Pte. Ltd., advised by Mintz Levin Cohn Ferris Glovsky & Popeo PC; as well as three separate $75 million offerings from Advanced Accelerator Applications SA, advised by Davis Polk & Wardwell LLP; Voyager Therapeutics Inc., advised by Goodwin Procter LLP; and education software company Instructure Inc., advised by Cooley.
Australian stem cell biotech Mesoblast Ltd., advised by Wilson Sonsini Goodrich & Rosati PC and Australian firm Minter Ellison, also filed and set terms last week for a $69.5 million IPO set to price the week of Nov. 9.
The rest of IPO calendar includes two holdovers from previous weeks that have yet to price, plus a small bank offering.
Xtera Communications Inc., a supplier of a fiber optics cables and equipment designed to expand telecommunications bandwidth, is projected to raise about $55 million under the guidance of DLA Piper by offering 5.5 million shares priced between $9 and $11.
Chinese athletic shoemaker Sole Elite Group Ltd., which has been in the hopper for weeks, now expects to raise about $12.5 million after cutting the size of its offering to include 2 million units priced between $5.50 and $7. The company is guided by Schiff Hardin LLP.
Equity Bancshares Inc. is also set to price the week of Nov. 9. The company, advised by Norton Rose Fulbright, could raise about $41 million by selling $1.8 million shares priced between $22 and $24.
The uptick in activity comes after an October that saw 30 new filings, the most since June, expanding the backlog after a light September — though it’s uncertain how many of these deals will price in the fourth quarter or carry into 2016.
The remaining November pipeline was bolstered Friday when Square Inc. set terms on an estimated $324 million IPO, guided by Wilson Sonsini. The wireless payments company founded by Twitter co-CEO Jack Dorsey plans to issue 27 million Class A shares priced between $11 and $13, an IPO currently set to schedule the week of Nov. 16, according to Renaissance Capital.
Square, a so-called unicorn — a term for private companies with valuations of more than $1 billion — is also a closely watched bellwether for the technology industry that has produced fewer offerings in 2015. Many tech companies are staying private longer, avoiding the costs and scrutiny of going public while private valuations remain attractive.
San Francisco-based Square would be valued at about $3.8 billion if shares sell at midrange. The company’s value was estimated at $6 billion last year after receiving an $150 million investment from the Singapore government.
Any uptick in IPO offerings would reverse a tepid start for November after the prior week saw only three companies price small offerings.
Kura Oncology Inc., a Goodwin Procter-advised medicine company specializing in treatments for solid tumors and blood cancers, raised $50 million; Louisiana bank First Guaranty Bancshares raised $11 million in a downsized offering advised by Luse Gorman PC; and Fuling Global Inc., a Chinese maker of plastic cutlery used by fast-food restaurants, raised $5 million under the guidance of Virginia law firm Kaufman & Canoles PC.
Renaissance Capital data shows that 156 IPOs have priced so far in 2015, down about one-third from the year-ago pace. At the current rate, this year will become the first since 2012 to produce fewer than 200 IPOs.
–Editing by Katherine Rautenberg and Kelly Duncan.
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